CarMax, Inc. (NYSE:KMX), the nation’s largest and most
profitable retailer of used cars, today reported results for the
second quarter ended August 31, 2021.
Highlights:
- Record net revenues of $8.0 billion, up 48.7% compared with the
prior year second quarter.
- Sold 419,895 units through our retail and wholesale channels
combined, up 19.9% from the prior year quarter, primarily driven by
strong demand for used autos and solid execution supported by our
omni-channel experience.
- Retail used unit sales increased 6.7% to a second quarter
record of 231,797 vehicles and comparable store unit sales
increased 6.2% compared with the same quarter a year ago.
- Wholesale units increased 41.4% to 188,098 vehicles from the
prior year second quarter, an all-time high quarterly record.
- Bought 364,263 vehicles from consumers in the second quarter, a
59% increase versus the prior year quarter. Approximately 188,000
vehicles bought in the quarter were purchased from consumers
through our nationwide online instant appraisal offerings.
- Gross profit per retail used unit was $2,185, in-line with
historical performance and down slightly from the second quarter
last year. Wholesale gross profit per unit was $1,005, an $81 per
unit decrease when compared with the second quarter last year.
- CarMax Auto Finance (CAF) income increased 35.9% to $200.0
million due to higher net interest margin and an increase in
average managed receivables.
- Net earnings per diluted share of $1.72, down from $1.79 per
diluted share a year ago primarily due to last year’s COVID-related
cost savings.
CEO Commentary:
“Our omni-channel platform, in combination with our unique
customer offerings, industry expertise and solid execution, drove
performance across our diversified business and led to a record
level of used sales for the second quarter and an all-time record
for wholesale vehicle sales” said Bill Nash, president and chief
executive officer.
“Of particular note is the performance of our online instant
appraisal offering, which continues to exceed our expectations.
Just six months after the nationwide launch, we have already
purchased over 350,000 cars from consumers online with this digital
product,” Nash continued. “We continue to make investments in
growth and innovation for our customers’ benefit and remain on
track to bring our fully self-service online experience to all of
our retail consumers by the end of the fiscal year.”
Nash concluded, “We’ve intentionally built our omni-channel
platform to give every customer the ability to progress to a sale
or buy regardless of how they shop with us, which will enable
sustainable growth and create meaningful long-term shareholder
value.”
Second Quarter Business Performance
Review:
Sales. Combined retail and
wholesale used vehicle unit sales were 419,895, an increase of
19.9% from the prior year’s second quarter. Online retail sales(1)
accounted for 9% of retail unit sales, compared to 3% in the second
quarter last year. Revenue from online transactions(2), including
retail and wholesale unit sales, was $2.2 billion, or approximately
28% of net revenues, compared to 18% of net revenues in last year’s
second quarter.
Total retail used vehicle unit sales increased 6.7% to 231,797
and comparable store used unit sales increased 6.2% from the prior
year’s second quarter. We believe several factors contributed to
our comparable store sales growth, including a robust used auto
demand environment and solid execution supported by our
omni-channel customer experience. Total retail used vehicle
revenues increased 39.1% compared with the prior year’s second
quarter due to the increase in both average retail selling prices,
which rose more than $6,000, or 30.8%, and used units sold. The
price increase largely reflected higher vehicle acquisition costs
resulting from strong wholesale industry valuations.
Total wholesale vehicle unit sales were 188,098, an increase of
41.4% compared with the prior year’s second quarter. Wholesale
sales benefited from the large increase in appraisal volume from
online offerings and strong offers aided by higher market prices.
Total wholesale revenues increased 107.7% compared with the prior
year’s second quarter due to average wholesale selling prices
rising almost $3,000, or 47.7%, and the increase in units sold.
Other sales and revenues increased 11.3% compared with the
second quarter of fiscal 2021, reflecting an increase of $18.6
million. The increase was largely driven by the addition of Edmunds
advertising and subscription revenues and an improvement in net
third-party finance provider fees due to lower Tier 3 originations
and favorability from our renegotiated fee agreements. This
increase was partially offset by last year’s sale of a new car
franchise and a decrease in both extended protection plan (EPP)
profit sharing revenues and service revenues compared to last
year’s second quarter.
Gross Profit. Total gross
profit increased to $815.5 million, an increase of 8.4% versus last
year’s second quarter. Retail used vehicle gross profit rose 5.3%,
reflecting the increase in total used unit sales. Retail used
vehicle gross profit per unit of $2,185 was in-line with historical
performance and down slightly from $2,214 in the prior year’s
quarter. Wholesale vehicle gross profit increased 30.9% versus the
prior year’s quarter, largely reflecting an increase in volume.
Wholesale vehicle gross profit per unit of $1,005 was down from
$1,086 in the prior year quarter. Other gross profit decreased 5.3%
reflecting a decrease in service margin due to the impact of
COVID-related savings reflected in last year’s second quarter, an
increase in warranty service costs, shifting retail service
capacity to support production, as well as a decrease in EPP profit
sharing revenues when compared to last year’s quarter. The decrease
in other gross profit was partially offset by the inclusion of
Edmunds gross profit in our consolidated financial results and
favorability from third-party finance fees compared with the second
quarter of fiscal 2021.
SG&A. Compared with the
second quarter of fiscal 2021, SG&A expenses increased 30.0% to
$574.3 million. Contributing factors include an increase in
staffing and sales related compensation, continued spending on our
technology platforms and strategic initiatives to support increased
consumer demand for our omni-channel experiences and the planned
increases in advertising expense. In the prior year’s second
quarter we took material cost reduction actions in response to the
pandemic, which included streamlining investments presented in
other overhead and lowering compensation and benefit costs.
SG&A as a percent of gross profit was 70.4%, up from 58.8%
in the prior year’s second quarter that included COVID-related cost
reductions. For the first six months of fiscal 2022, SG&A as a
percent of gross profit was 64.8% versus 69.3% in the prior year
period.
CarMax Auto
Finance.(3) CAF income increased 35.9% to $200.0
million, primarily reflecting the increase in net interest margin
and average managed receivables, partially offset by the $35.5
million loan loss provision compared with the $26.0 million
provision in the same period last year. As of August 31, 2021, the
allowance for loan losses of $398.1 million was 2.66% of ending
managed receivables, in-line with 2.62% as of May 31, 2021.
CAF’s total interest margin percentage, which represents the
spread between interest and fees charged to consumers and our
funding costs, improved to 7.2% of average managed receivables from
6.0% in the prior year’s second quarter, due to lower funding costs
and higher interest and fees from consumers. After the effect of
3-day payoffs, CAF financed 43.0% of units sold in the current
quarter, in-line with 42.6% in the prior year’s second quarter.
During the second quarter, CAF retained 10% of Tier 3 volume, up
from 5% of Tier 3 in previous quarters. Additionally, CAF began a
small test originating in the Tier 2 space. Any future adjustments
in Tier 2 and Tier 3 will carefully consider the broader lending
environment along with the long-term sustainability of the
change.
Share Repurchase Activity.
We repurchased 1.8 million shares of common stock for $220.0
million pursuant to our share repurchase program during the second
quarter of fiscal 2022. As of August 31, 2021, we had $991.5
million remaining available for repurchase under the outstanding
authorization.
Store Openings. During the
second quarter of fiscal 2022, we opened three new locations. In
fiscal year 2022, we plan to open a total of 10 new locations.
(1)
An online retail unit sale is defined as a sale where the
customer completes all four of these major transactional activities
remotely: reserving the vehicle; financing the vehicle, if needed;
trading-in or opting out of a trade in; and, creating a remote
sales order.
(2)
Revenue from online transactions is defined as revenue from
retail sales that qualify for an online retail sale, as well as any
EPP and third-party finance contribution, wholesale sales where the
winning bid was an online bid and all revenue earned by Edmunds.
(3)
Although CAF benefits from certain indirect overhead
expenditures, we have not allocated indirect costs to CAF to avoid
making subjective allocation decisions.
Supplemental Financial
Information Amounts and percentage calculations may not
total due to rounding.
Sales Components
Three Months Ended August
31
Six Months Ended August
31
(In millions)
2021
2020
Change
2021
2020
Change
Used vehicle sales
$
6,104.4
$
4,389.2
39.1
%
$
12,261.7
$
7,175.4
70.9
%
Wholesale vehicle sales
1,701.6
819.1
107.7
%
3,075.9
1,161.9
164.7
%
Other sales and revenues:
Extended protection plan revenues
113.0
119.4
(5.4)
%
247.3
192.8
28.2
%
Third-party finance fees, net
2.8
(15.4)
118.0
%
(1.8)
(26.2)
93.1
%
Advertising & subscription revenues
(1)
34.5
—
100.0
%
34.5
—
100.0
%
Other
32.1
59.9
(46.4)
%
68.3
97.0
(29.5)
%
Total other sales and revenues
182.4
163.9
11.3
%
348.3
263.6
32.1
%
Total net sales and operating revenues
$
7,988.4
$
5,372.2
48.7
%
$
15,686.0
$
8,600.9
82.4
%
(1)
Excludes intersegment revenues that have been eliminated in
consolidation.
Unit Sales
Three Months Ended August
31
Six Months Ended August
31
2021
2020
Change
2021
2020
Change
Used vehicles
231,797
217,330
6.7
%
502,596
352,358
42.6
%
Wholesale vehicles
188,098
132,980
41.4
%
369,487
196,275
88.2
%
Average Selling Prices
Three Months Ended August
31
Six Months Ended August
31
2021
2020
Change
2021
2020
Change
Used vehicles
$
26,141
$
19,991
30.8
%
$
24,197
$
20,127
20.2
%
Wholesale vehicles
$
8,701
$
5,891
47.7
%
$
7,997
$
5,639
41.8
%
Vehicle Sales Changes
Three Months Ended August
31
Six Months Ended August
31
2021
2020
2021
2020
Used vehicle units
6.7
%
3.9
%
42.6
%
(18.7)
%
Used vehicle revenues
39.1
%
1.0
%
70.9
%
(19.3)
%
Wholesale vehicle units
41.4
%
5.1
%
88.2
%
(20.6)
%
Wholesale vehicle revenues
107.7
%
20.8
%
164.7
%
(13.3)
%
Comparable Store Used Vehicle Sales
Changes (1)
Three Months Ended August
31
Six Months Ended August
31
2021
2020
2021
2020
Used vehicle units
6.2
%
1.2
%
41.8
%
(21.0)
%
Used vehicle revenues
38.8
%
(1.6)
%
70.4
%
(21.6)
%
(1)
Stores are added to the comparable store base beginning in
their fourteenth full month of operation. Comparable store
calculations include results for a set of stores that were included
in our comparable store base in both the current and corresponding
prior year periods.
Used Vehicle Financing Penetration by
Channel (Before the Impact of 3-day Payoffs) (1)
Three Months Ended August
31
Six Months Ended August
31
2021
2020
2021
2020
CAF (2)
47.1
%
45.7
%
46.9
%
42.8
%
Tier 2 (3)
21.6
%
22.3
%
22.2
%
24.7
%
Tier 3 (4)
7.2
%
11.1
%
8.7
%
12.4
%
Other (5)
24.1
%
20.9
%
22.2
%
20.1
%
Total
100.0
%
100.0
%
100.0
%
100.0
%
(1)
Calculated as used vehicle units financed for respective
channel as a percentage of total used units sold.
(2)
Includes CAF's Tier 3 loan originations, which represent
less than 1% of total used units sold.
(3)
Third-party finance providers who generally pay us a fee or
to whom no fee is paid.
(4)
Third-party finance providers to whom we pay a fee.
(5)
Represents customers arranging their own financing and
customers that do not require financing
Selected Operating
Ratios
Three Months Ended August
31
Six Months Ended August
31
(In millions)
2021
% (1)
2020
% (1)
2021
% (1)
2020
% (1)
Net sales and operating revenues
$
7,988.4
100.0
$
5,372.2
100.0
$
15,686.0
100.0
$
8,600.9
100.0
Gross profit
$
815.5
10.2
$
752.1
14.0
$
1,740.0
11.1
$
1,106.3
12.9
CarMax Auto Finance income
$
200.0
2.5
$
147.2
2.7
$
441.8
2.8
$
198.1
2.3
Selling, general, and administrative
expenses
$
574.3
7.2
$
441.9
8.2
$
1,128.4
7.2
$
766.8
8.9
Interest expense
$
22.4
0.3
$
22.5
0.4
$
42.9
0.3
$
46.4
0.5
Earnings before income taxes
$
367.8
4.6
$
388.3
7.2
$
935.1
6.0
$
392.5
4.6
Net earnings
$
285.3
3.6
$
296.7
5.5
$
722.0
4.6
$
301.7
3.5
(1)
Calculated as a percentage of net sales and operating
revenues.
Gross Profit (1)
Three Months Ended August
31
Six Months Ended August
31
(In millions)
2021
2020
Change
2021
2020
Change
Used vehicle gross profit
$
506.5
$
481.2
5.3
%
$
1,103.5
$
742.7
48.6
%
Wholesale vehicle gross profit
189.0
144.4
30.9
%
374.9
206.3
81.7
%
Other gross profit
120.0
126.5
(5.3)
%
261.6
157.3
66.3
%
Total
$
815.5
$
752.1
8.4
%
$
1,740.0
$
1,106.3
57.3
%
(1)
Amounts are net of intercompany eliminations.
Gross Profit per Unit
(1)
Three Months Ended August
31
Six Months Ended August
31
2021
2020
2021
2020
$ per unit(2)
%(3)
$ per unit(2)
%(3)
$ per unit(2)
%(3)
$ per unit(2)
%(3)
Used vehicle gross profit
$
2,185
8.3
$
2,214
11.0
$
2,196
9.0
$
2,108
10.4
Wholesale vehicle gross profit
$
1,005
11.1
$
1,086
17.6
$
1,015
12.2
$
1,051
17.8
Other gross profit
$
517
65.8
$
583
77.3
$
521
75.1
$
447
59.7
Total gross profit
$
3,518
10.2
$
3,461
14.0
$
3,462
11.1
$
3,140
12.9
(1)
Amounts are net of intercompany eliminations. Those
eliminations had the effect of increasing used vehicle gross profit
per unit and wholesale vehicle gross profit per unit and decreasing
other gross profit per unit by immaterial amounts.
(2)
Calculated as category gross profit divided by its
respective units sold, except the other and total categories, which
are divided by total used units sold.
(3)
Calculated as a percentage of its respective sales or
revenue.
SG&A Expenses (1)
(2)
Three Months Ended August
31
Six Months Ended August
31
(In millions)
2021
2020
Change
2021
2020
Change
Compensation and benefits:
Compensation and benefits, excluding
share-based compensation expense
$
299.5
$
239.3
25.1
%
$
583.6
$
430.5
35.6
%
Share-based compensation expense
28.7
34.3
(16.3)
%
67.1
58.0
15.8
%
Total compensation and benefits (3)
$
328.2
$
273.6
19.9
%
$
650.7
$
488.5
33.2
%
Occupancy costs
55.1
52.8
4.3
%
105.6
98.6
7.2
%
Advertising expense
85.0
50.5
68.5
%
157.5
85.0
85.4
%
Other overhead costs (4)
106.0
65.0
63.0
%
214.6
94.7
126.3
%
Total SG&A expenses
$
574.3
$
441.9
30.0
%
$
1,128.4
$
766.8
47.1
%
SG&A as % of gross profit
70.4
%
58.8
%
11.6
%
64.8
%
69.3
%
(4.5)
%
(1)
Depreciation and amortization previously included in
SG&A expenses is now separately presented and is excluded from
this table. Prior period amounts have been reclassified to conform
to the current period’s presentation.
(2)
Amounts are net of intercompany eliminations.
(3)
Excludes compensation and benefits related to reconditioning
and vehicle repair service, which are included in cost of sales.
(4)
Includes IT expenses, non-CAF bad debt, insurance,
preopening and relocation costs, charitable contributions, travel
and other administrative expenses.
Components of CAF Income and Other CAF
Information
Three Months Ended August
31
Six Months Ended August
31
(In millions)
2021
% (1)
2020
% (1)
2021
% (1)
2020
% (1)
Interest margin:
Interest and fee income
$
324.1
8.8
$
280.1
8.5
$
634.4
8.8
$
562.6
8.5
Interest expense
(60.6)
(1.7)
(81.3)
(2.5)
(126.4)
(1.8)
(165.9)
(2.5)
Total interest margin
263.5
7.2
198.8
6.0
508.0
7.0
396.7
6.0
Provision for loan losses
(35.5)
(1.0)
(26.0)
(0.8)
(11.1)
(0.2)
(148.0)
(2.2)
Total interest margin after provision for
loan losses
228.0
6.2
172.8
5.2
496.9
6.9
248.7
3.7
Total other expense
—
—
(0.3)
—
—
—
(2.2)
—
Total direct expenses
(27.9)
(0.8)
(25.4)
(0.8)
(55.1)
(0.8)
(48.4)
(0.7)
CarMax Auto Finance income
$
200.0
5.4
$
147.2
4.5
$
441.8
6.1
$
198.1
3.0
Total average managed receivables
$
14,683.3
$
13,218.8
$
14,416.0
$
13,313.6
Net loans originated
$
2,372.4
$
1,790.6
$
4,855.8
$
2,782.9
Net penetration rate
43.0
%
42.6
%
43.4
%
40.1
%
Weighted average contract rate
8.5
%
8.2
%
8.7
%
8.3
%
Ending allowance for loan losses
$
398.1
$
432.5
$
398.1
$
432.5
Warehouse facility information:
Ending funded receivables
$
3,181.9
$
2,253.7
$
3,181.9
$
2,253.7
Ending unused capacity
$
1,643.1
$
1,246.3
$
1,643.1
$
1,246.3
(1)
Annualized percentage of total average managed receivables.
Earnings Highlights
Three Months Ended August
31
Six Months Ended August
31
(In millions except per share data)
2021
2020
Change
2021
2020
Change
Net earnings
$
285.3
$
296.7
(3.9)
%
$
722.0
$
301.7
139.3
%
Diluted weighted average shares
outstanding
165.6
165.6
—
%
166.0
164.6
0.8
%
Net earnings per diluted share
$
1.72
$
1.79
(3.9)
%
$
4.35
$
1.83
137.7
%
Conference Call
Information
We will host a conference call for investors at 9:00 a.m. ET
today, September 30, 2021. Domestic investors may access the call
at 1-888-298-3261 (international callers dial 1-706-679-7457). The
conference I.D. for both domestic and international callers is
3464618. A live webcast of the call will be available on our
investor information home page at investors.carmax.com.
A replay of the webcast will be available on the company’s
website at investors.carmax.com through December 21, 2021, or via
telephone (for approximately one week) by dialing 1-855-859-2056
(or 1-404-537-3406 for international access) and entering the
conference ID 3464618.
Third Quarter Fiscal 2022 Earnings
Release Date
We currently plan to release results for the third quarter
ending November 30, 2021, on Wednesday, December 22, 2021, before
the opening of trading on the New York Stock Exchange. We plan to
host a conference call for investors at 9:00 a.m. ET on that date.
Information on this conference call will be available on our
investor information home page at investors.carmax.com in December
2021.
About CarMax
CarMax, the nation’s largest retailer of used autos,
revolutionized the automotive retail industry by driving integrity,
honesty and transparency in every interaction. The company offers a
truly personalized experience with the option for customers to do
as much, or as little, online and in-store as they want. CarMax
also provides a variety of vehicle delivery methods, including home
delivery, contactless curbside pickup and appointments in its
stores. During the fiscal year ending February 28, 2021, CarMax
sold more than 750,000 used vehicles and more than 425,000
wholesale vehicles at its in-store and virtual auctions. In
addition, CarMax Auto Finance originated more than $6 billion in
receivables during fiscal year 2021, adding to its near $14 billion
portfolio. CarMax has more than 220 stores, approximately 27,000
Associates, and is proud to have been recognized for 17 consecutive
years as one of the Fortune 100 Best Companies to Work For®. For
more information, visit www.carmax.com.
Forward-Looking
Statements
We caution readers that the statements contained in this release
about our future business plans, operations, challenges,
opportunities or prospects, including without limitation any
statements or factors regarding expected operating capacity, sales,
inventory, market share, revenue, margins, expenses, liquidity,
loan originations, capital expenditures, debt obligations or
earnings, are forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. You can identify these forward-looking statements by the
use of words such as “anticipate,” “believe,” “could,” “estimate,”
“expect,” “intend,” “may,” “outlook,” “plan,” “positioned,”
“predict,” “should,” “will” and other similar expressions, whether
in the negative or affirmative. Such forward-looking statements are
based upon management’s current knowledge and assumptions about
future events and involve risks and uncertainties that could cause
actual results to differ materially from anticipated results. Among
the factors that could cause actual results and outcomes to differ
materially from those contained in the forward-looking statements
are the following:
- The effect and consequences of the Coronavirus public health
crisis on matters including U.S. and local economies; our business
operations and continuity; the availability of corporate and
consumer financing; the health and productivity of our associates;
the ability of third-party providers to continue uninterrupted
service; and the regulatory environment in which we operate.
- Changes in general or regional U.S. economic conditions.
- Changes in the availability or cost of capital and working
capital financing, including changes related to the asset-backed
securitization market.
- Changes in the competitive landscape and/or our failure to
successfully adjust to such changes.
- Events that damage our reputation or harm the perception of the
quality of our brand.
- Our inability to realize the benefits associated with our
omni-channel initiatives.
- Our inability to realize the expected benefits of strategic
transactions, including our acquisition of Edmunds.
- Our inability to recruit, develop and retain associates and
maintain positive associate relations.
- The loss of key associates from our store, regional or
corporate management teams or a significant increase in labor
costs.
- Security breaches or other events that result in the
misappropriation, loss or other unauthorized disclosure of
confidential customer, associate or corporate information.
- Significant changes in prices of new and used vehicles.
- Changes in economic conditions or other factors that result in
greater credit losses for CAF’s portfolio of auto loans receivable
than anticipated.
- A reduction in the availability of or access to sources of
inventory or a failure to expeditiously liquidate inventory.
- Changes in consumer credit availability provided by our
third-party finance providers.
- Changes in the availability of extended protection plan
products from third-party providers.
- Factors related to the regulatory and legislative environment
in which we operate.
- Factors related to geographic and sales growth, including the
inability to effectively manage our growth.
- The failure of or inability to sufficiently enhance key
information systems.
- The performance of the third-party vendors we rely on for key
components of our business.
- The effect of various litigation matters.
- Adverse conditions affecting one or more automotive
manufacturers, and manufacturer recalls.
- The failure or inability to realize the benefits associated
with our strategic investments.
- The inaccuracy of estimates and assumptions used in the
preparation of our financial statements, or the effect of new
accounting requirements or changes to U.S. generally accepted
accounting principles.
- The volatility in the market price for our common stock.
- The failure or inability to adequately protect our intellectual
property.
- The occurrence of severe weather events.
- Factors related to the geographic concentration of our
stores.
For more details on factors that could affect expectations, see
our Annual Report on Form 10-K for the fiscal year ended February
28, 2021, and our quarterly or current reports as filed with or
furnished to the U.S. Securities and Exchange Commission. Our
filings are publicly available on our investor information home
page at investors.carmax.com. Requests for information may also be
made to the Investor Relations Department by email to
investor_relations@carmax.com or by calling (804) 747-0422 x7865.
We undertake no obligation to update or revise any forward-looking
statements after the date they are made, whether as a result of new
information, future events or otherwise.
CARMAX,
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Three Months Ended August
31
Six Months Ended August
31
(In thousands except per share data)
2021
% (1)
2020
% (1)
2021
% (1)
2020
% (1)
SALES AND OPERATING REVENUES:
Used vehicle sales
$
6,104,366
76.4
$
4,389,233
81.7
$
12,261,710
78.2
$
7,175,435
83.4
Wholesale vehicle sales
1,701,572
21.3
819,082
15.2
3,075,929
19.6
1,161,934
13.5
Other sales and revenues
182,421
2.3
163,851
3.0
348,319
2.2
263,579
3.1
NET SALES AND OPERATING
REVENUES
7,988,359
100.0
5,372,166
100.0
15,685,958
100.0
8,600,948
100.0
COST OF SALES:
Used vehicle cost of sales
5,597,842
70.1
3,908,065
72.7
11,158,179
71.1
6,432,741
74.8
Wholesale vehicle cost of sales
1,512,559
18.9
674,712
12.6
2,701,072
17.2
955,634
11.1
Other cost of sales
62,474
0.8
37,246
0.7
86,714
0.6
106,247
1.2
TOTAL COST OF SALES
7,172,875
89.8
4,620,023
86.0
13,945,965
88.9
7,494,622
87.1
GROSS PROFIT
815,484
10.2
752,143
14.0
1,739,993
11.1
1,106,326
12.9
CARMAX AUTO FINANCE INCOME
200,033
2.5
147,195
2.7
441,764
2.8
198,145
2.3
Selling, general, and administrative
expenses
574,286
7.2
441,923
8.2
1,128,355
7.2
766,814
8.9
Depreciation and amortization (2)
52,789
0.7
48,285
0.9
102,679
0.7
97,110
1.1
Interest expense
22,410
0.3
22,469
0.4
42,944
0.3
46,427
0.5
Other (income) expense
(1,782)
—
(1,680)
—
(27,359)
(0.2)
1,615
—
Earnings before income taxes
367,814
4.6
388,341
7.2
935,138
6.0
392,505
4.6
Income tax provision
82,547
1.0
91,645
1.7
213,115
1.4
90,831
1.1
NET EARNINGS
$
285,267
3.6
$
296,696
5.5
$
722,023
4.6
$
301,674
3.5
WEIGHTED AVERAGE COMMON SHARES:
Basic
162,966
163,434
163,058
163,053
Diluted
165,643
165,623
165,969
164,580
NET EARNINGS PER SHARE:
Basic
$
1.75
$
1.82
$
4.43
$
1.85
Diluted
$
1.72
$
1.79
$
4.35
$
1.83
(1)
Percents are calculated as a percentage of net sales and
operating revenues and may not total due to rounding.
(2)
Depreciation and amortization previously included in
Selling, general, and administrative expenses is now separately
presented. Prior period amounts have been reclassified to conform
to the current period’s presentation.
CARMAX,
INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
As of
August 31
February 28
August 31
(In thousands except share data)
2021
2021
2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
58,095
$
132,319
$
711,561
Restricted cash from collections on auto
loans receivable
570,567
496,415
520,876
Accounts receivable, net
517,260
239,070
203,155
Inventory
4,105,458
3,157,159
2,824,959
Other current assets
119,916
91,833
67,308
TOTAL CURRENT ASSETS
5,371,296
4,116,796
4,327,859
Auto loans receivable, net
14,656,170
13,489,819
13,013,106
Property and equipment, net
3,128,896
3,055,563
3,044,773
Deferred income taxes
117,288
164,261
133,749
Operating lease assets
553,727
431,652
444,158
Goodwill
150,343
653
8,676
Other assets
475,602
282,797
273,985
TOTAL ASSETS
$
24,453,322
$
21,541,541
$
21,246,306
LIABILITIES AND SHAREHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
903,847
$
799,333
$
683,715
Accrued expenses and other current
liabilities
487,771
415,465
350,185
Accrued income taxes
422
218
64,734
Current portion of operating lease
liabilities
43,676
30,953
31,616
Short-term debt
167
—
838
Current portion of long-term debt
10,562
9,927
10,005
Current portion of non-recourse notes
payable
512,515
442,652
457,849
TOTAL CURRENT LIABILITIES
1,958,960
1,698,548
1,598,942
Long-term debt, excluding current
portion
2,190,415
1,322,415
1,896,784
Non-recourse notes payable, excluding
current portion
14,439,700
13,297,504
12,900,984
Operating lease liabilities, excluding
current portion
538,296
423,618
435,113
Other liabilities
410,772
434,843
431,923
TOTAL LIABILITIES
19,538,143
17,176,928
17,263,746
Commitments and contingent liabilities
SHAREHOLDERS’ EQUITY:
Common stock, $0.50 par value; 350,000,000
shares authorized; 162,470,173 and 163,172,333 shares issued and
outstanding as of August 31, 2021 and February 28, 2021,
respectively
81,235
81,586
82,081
Capital in excess of par value
1,653,066
1,513,821
1,460,300
Accumulated other comprehensive loss
(112,343)
(118,691)
(160,426)
Retained earnings
3,293,221
2,887,897
2,600,605
TOTAL SHAREHOLDERS’ EQUITY
4,915,179
4,364,613
3,982,560
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$
24,453,322
$
21,541,541
$
21,246,306
CARMAX,
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended August
31
(In thousands)
2021
2020
OPERATING ACTIVITIES:
Net earnings
$
722,023
$
301,674
Adjustments to reconcile net earnings to
net cash (used in) provided by operating activities:
Depreciation and amortization
129,300
118,967
Share-based compensation expense
72,780
62,794
Provision for loan losses
11,107
147,977
Provision for cancellation reserves
62,886
35,678
Deferred income tax provision
32,502
8,598
Other
(19,883)
5,098
Net (increase) decrease in:
Accounts receivable, net
(244,471)
(12,065)
Inventory
(948,299)
21,457
Other current assets
(26,496)
19,691
Auto loans receivable, net
(1,177,458)
188,601
Other assets
(9,745)
(6,586)
Net increase (decrease) in:
Accounts payable, accrued expenses and
other
current liabilities and accrued income
taxes
115,542
24,912
Other liabilities
(105,109)
(27,020)
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES
(1,385,321)
889,776
INVESTING ACTIVITIES:
Capital expenditures
(137,838)
(91,998)
Proceeds from disposal of property and
equipment
260
826
Proceeds from sale of business
602
—
Purchases of investments
(12,651)
(2,566)
Sales and returns of investments
10,954
1,381
Business acquisition, net of cash
acquired
(241,563)
—
NET CASH USED IN INVESTING
ACTIVITIES
(380,236)
(92,357)
FINANCING ACTIVITIES:
Increase in short-term debt, net
167
798
Proceeds from issuances of long-term
debt
3,035,601
1,542,500
Payments on long-term debt
(2,168,411)
(1,425,084)
Cash paid for debt issuance costs
(9,547)
(8,037)
Payments on finance lease obligations
(5,709)
(2,880)
Issuances of non-recourse notes
payable
7,414,283
4,798,000
Payments on non-recourse notes payable
(6,201,801)
(5,028,898)
Repurchase and retirement of common
stock
(355,495)
(54,151)
Equity issuances
60,087
91,724
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES
1,769,175
(86,028)
Increase in cash, cash equivalents, and
restricted cash
3,618
711,391
Cash, cash equivalents, and restricted
cash at beginning of year
771,947
656,390
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH AT END OF PERIOD
$
775,565
$
1,367,781
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210930005142/en/
Investors: David Lowenstein, Assistant Vice President, Investor
Relations investor_relations@carmax.com, (804) 747-0422 x7865
Media: pr@carmax.com, (855) 887-2915
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